The top 10 issues that, when uncovered, are most likely to prompt an audit of indirect taxes, such as sales and use taxes, according to the Tax & Accounting business of Thomson Reuters are the following:
1. Nexus, but no registration. Nexus is a confluence of factors that make a business liable for sales and use tax payment and reporting. It is likely that you have nexus with a state if you are paying payroll or other taxes. If you are not registered for sales tax, but do pay another kind of tax in that state, it is very probable that you will be contacted for an audit. All a state has to do is perform a little cross-checking.
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